SME involvement in NBN not a "peripheral issue"

Stuart Corner
Monday, 15 December 2008 06:59

Opinion and Analysis

Telstra's competitors are calling for an ASIC/ASX investigation over what Telstra and the Opposition say is the 'peripheral' RFP issue of SME involvement in the National Broadband Network, but it is there in black and white, in the RFP: 'proponents' that do not include SME involvement provisions will not be considered. However 'proposals' that do not include SME involvement provisions might be....

Telstra failed to submit a full proposal in response to the NBN RFP instead putting in a 13 page summary. Communication minister, Stephen Conroy repeatedly in Parliament and in media interviews spoke of it as being on par with other full bids saying it could be considered along with these. And he came under fire from shadow minister, Nick Minchin for doing so.

When it announced today, 15 December, that it had been excluded from the RFP process, Telstra said: "The reasoning given by the Commonwealth for the exclusion is that Telstra did not include a plan for how to involve small and medium enterprises (SMEs) in the building of the NBN when Telstra lodged its NBN proposal on 26 November."

It added that: Telstra considers it has fully complied with the RFP requirements (which did not require a SME plan to be lodged as part of the RFP proposal itself) and that the Commonwealth has used a peripheral issue to exclude Telstra."

Telstra admitted that the SME plan had been submitted later on 4 December and Minchin has leapt to Telstra's defence saying: that the SME issue was "a trivial reason dreamed up by the expert panel and the Commonwealth for Telstra's exclusion."

He said this was "quite remarkable" claiming that "the tender documents are so vague and open to multiple interpretations, they are not worth the paper they are written on."

However on one reading the RFP was quite specific. Claus 1.5.32 states: "It is a condition for participation in this process that Proponents submit a plan outlining opportunities for Australian and New Zealand SMEs to provide goods and services to the project. Further details on this requirement are provided in clause 10.9 and section 6.1 of Schedule 2."

And 10.9 states that: "The Commonwealth will exclude a proposal from further consideration if the Commonwealth considers that the proponent does not meet the following conditions for participation... Proponents must prepare a plan demonstrating how they will provide full, fair and reasonable opportunity to Australian and New Zealand SMEs to supply goods and services to the NBN Project."

The crucial word here is 'proponent' which is open to interpretation that the plan need not be part of the initial proposal. The preceding clause, 10.8 is similarly worded but with this crucial difference.

"Subject to clause 5.4.2, the Commonwealth will exclude a Proposal from further consideration if the Commonwealth considers that the Proposal does not comply with the following requirements: Proposals are written in English; measurements are expressed in Australian legal units of measurement; the Proposal includes a completed and signed Proponent's Declaration; and clause 9.3.3."

Had the RFP used proposal in 10.9 Telstra would definitely have been non-compliant. Now the lawyers will be able to argue about it.